Geothermal: Detailing the Promise

Note: Advocating for a stronger role for government in accelerating the deployment of geo-exchange, or ground-source heating and cooling.

Originally published: Corporate Knights magazine, November 2008

A derelict building in downtown Toronto is being transformed into a cutting-edge green hotel, the Planet Traveler. It’s also a test-bed for me to find first-hand technologies that can cut carbon emissions by 80% from business-as-usual.I thought I’d find a mish-mash of small solutions. What I found was a magic bullet.

Geo-exchange heating and cooling (‘geo’) will reduce those emissions by 70%. In comparison the other options are akin to bailing out the Titanic with a teaspoon. Geo-exchange is the lowest-hanging fruit on the carbon-reducing tree.

I argue elsewhere (www.greenbonds.ca) that the need to cut carbon is so pressing that renewable energy sources should be pulled into the marketplace by smart government action. While the geo-exchange industry is already poised for rapid growth, it should still be the target of a comprehensive, national strategy to accelerate that growth.

Market conditions are just right for geo to reach what Malcolm Gladwell calls the “tipping point”. The economics work. All levels of government are starting to show support. The industry is maturing and becoming more professional and organized.Developers and engineering firms are getting on board. Even utilities are throwing their hat in the ring.

“It is”, says Liberal John Godfrey, “ripe for takeoff”. In ordinary times we could leave it to market forces.

But we do not live in ordinary times. The need for reductions in carbon emissions is too immediate, and the promise[1] of geo too great.

There remain obstacles in the marketplace. Building codes are outdated. There is a market gap between building developers, owners and those who pay the energy costs. Consumers are not informed. Inferior technologies have momentum. It’s capital-intensive.

These obstacles can be cleared with a comprehensive national strategy that accelerates the transformation of geo from a cottage industry to one that takes a real bite out of our emissions. It’s time to develop that strategy.

Geo-exchange is the transfer of heat with the ground by means of a heat pump and a series of buried pipes, through which liquid flows (it is not the same as ‘deep geo’, which involves tapping high temperatures way beneath the surface).Geo is not new. It’s been around for decades. It’s proven. There are a million installations in North America.

The key lies in the efficiency of the heat pump. For every unit of energy put in, five units come out.That’s 500% efficiency! It’s 5 times more efficient than baseboard heaters, and far more efficient than any other form of heating or cooling.As a renewable energy source, compared on a dollar per unit of energy basis, geo beats solar PV, solar thermal and even wind– hands down[2].

Aside from reducing energy use, a large number of point sources of carbon (furnaces, natural gas boilers) are concentrated onto the electrical grid. Carbon reduction is more focused – generating a clean grid. A difficult problem: but more feasible than making a furnace carbon-free.

Moving heat around … hmmm. Heat a community swimming pool and freeze the ice rink at the same time? Yep. How about taking the excess heat from office towers in winter (often being cooled) and heat some homes down the street? Absolutely. Community-wide coordination, known as district heating and cooling, is just the start of a strategy.

The economics make sense, but geo is capital intensive. New home installs cost $20,000 and payback is 7 or 8 years. Commercial installs pay back faster. The Planet Traveler project will pay back in 4 years, with additional capital costs of $100,000.

The keys to making geo pay are cheap capital and being in it for the long haul.New homes are a no-brainer. Put the additional cost into the mortgage and you’re cash positive from day one.

But there’s often a market gap between developer, owner and operator. Why would a condo developer put up all the extra capital when the operating costs are passed on? Heck, if it weren’t for building codes … According to Sustainable Development Technology Canada (SDTC), “Developers and builders generally have no stake in the long-term operating costs or performance of the building, and are rewarded based on their ability to control first costs and maintain construction schedules”[3].

Not all condo developers work that way. Resiance Gateway South Center is a 500-unit condo building in Calgary, and it’s going geo. The system is leased to the owners, who are insulated from rising energy costs. Resiance is a member of Build Green Alberta and “we feel we need to be as good as our word… [and create] a very efficient ‘green’ building”, says Barry Chow, VP.Resiance is an early adopter, and the project is notable by virtue of its rarity. Rarity is not what we need.

“Education”, says Jane Kearns, VP of Clean Energy Developments (CED), “is key. If consumers know about the value of geo-exchange in the buildings they buy, they will demand it.” Indeed.

Reid’s Heritage Homes is building one of Canada’s first all geo communities in the Inverlyn Lake Estates project in Kindardine, Ontario. “Customer surveys … clearly indicated that Canadians are … ready to take the steps toward energy efficiency an more sustainable communities”, says Ron Salisbury, Manager, Home Performance. Geo is, says Salisbury, the “future of homebuilding”.Reid’s Heritage is an early adopter, and is following the Great Gresky’s motto of ‘skating to where puck is going to be’.

“Geo-exchange makes existing heating and cooling technologies look like an 8 track player”, says Paul Mertes, CEO of Clean Energy Developments. It seems if people know about it, they prefer it. The challenge is to bring about a rapid, wholesale conversion to the iPod. Waiting for early adopters to spread the word is not good enough.

What we need is a high profile government-backed educational campaign so consumers know better and start demanding geo. Even better, just ban the old 8-track and legislate the iPod. Changing building codes is tortuous, but can be done with political will. Combine education and legislation with direct subsidies for developers, and ready access to the remaining capital through some sort of Green Mortgage program, and we’re getting somewhere.

All levels of governments are on board, to some extent, and so are the utilities, but we have yet to see signs of a coordinated national strategy. “Government and the utilities are dipping their toes in the water, but haven’t cannon-balled in to support the industry just yet”, says Kearns. “It’s slim pickin’s on the retrofit and commercial side of things.”

Retrofits are the big game here. If we’re serious about absolute reductions in carbon – not just slowing the increase – we need to address existing stock. There are no subsidies for the retrofit commercial project Planet Traveler, so our economic case must be made on its own. The only reason it’s happening is because I happen to be a techno-geek who knows what’s coming after the 8-track. Without my insistence, it would have been natural gas and air-conditioners – business as usual.

There are some promising moves.

Planet Traveler and the City of Toronto have formed a unique partnership. The City will let us use the laneway alongside the building to bury the underground pipes. In response to this request, City Council recommended a task force be set up to enable the use of City laneways throughout the city as conduits for geo pipes. Toronto’s move opens up retrofits in even the densest of downtown urban cores.

Utilities are starting to get on board.Geo benefits them because, paradoxically, it both increases and reduces their sales at the same time. Geo displaces competing natural gas, but lowers peak demand in summer months. More baseline supply and less variance are great for the grid.

Some jurisdictions push conservation programs to offset demand and buttress their environmental credentials. Hydro One has a pilot program whereby they offer zero interest loans for geo in existing homes. “Conservation and Demand Management is a viable alternative to new supply options”, says Giuliana Rossini, Director, Strategy and Conservation at Hydro One. “ This pilot program … is primarily an environmental benefit.” About 70 applications are in, and “customer willingness seems to be there.”

Utilities might be motivated to reduce some peak demand, and show some environmental concern – but is a utility really motivated to reduce total load? Load reduction programs need to be legislated or be given a clear profit-driven incentive. Companies do not forego profit for the environment.

These efforts need to be coordinated and accelerated. We need a national program spear-headed by the federal and provincial governments, involving all the stakeholders, to supplement the free market rate of adoption with a strong, cohesive push.

Government should take the following actions: target the retrofit market with direct incentives; increase awareness and provide education to both consumers and developers; promote bold new building code initiatives; guarantee the provision of low-cost capital through the commercial banks; motivate the utilities to accelerate their own incentive programs.

Under business as usual geo, like other renewable technologies, will slowly percolate through our energy infrastructure. Small, incremental changes will add up over the long term.

Incremental change over the long-term is not good enough. We need sharp declines in carbon emissions and we need them now.We’re in a war on carbon. Geo is one of our most effective resources in that war.It’s time to consciously and deliberately deploy that resource

[1] The promise of geo is to reduce energy use in buildings by up to 75% and carbon emissions by up to 98% (depending on the source of the electrons). Heating and cooling buildings is responsible for 20% of our total energy use, so geo can deliver a15% reduction in total carbon output.

[2] Geo-exchange energy is produced for 25% of the cost of wind, and less than 2% of the cost of solar PV.